April loan growth decelerates to 8.78%

banknegara_building

-A +A

KUALA LUMPUR: The domestic total loan growth in April decelerated to 8.78% year-on-year (y-o-y), as compared with 9.24% in March, as household and business lending slowed.

According to Bank Negara Malaysia’s monthly statistical bulletin in April, the loan application for the month was almost flat; it went up barely 0.7% y-o-y compared to a deceleration of 4% y-o-y in March.

Meanwhile, loan approval contracted by 2.4% compared to an increase of 1.7% a month before.

“On an annualised basis, loans grew 5% y-o-y, still lagging our 7% to 8% loans growth expectation,” Kenanga Research analyst Kelly Tan told The Edge Financial Daily when contacted.  “Essentially, growth in repayments outpaced disbursements,” she said.

On year-to-date basis, repayments grew 1.3% y-o-y, while disbursements’ growth was 0.7% in the same period.

Tan also noted that leading indicators namely loan application and approval suggested that total loan growth could soften further.

PublicInvest analyst Ching Weng Jin commented that market has expected the slower loan growth, particularly in a period when borrowing rules are getting more stringent.

“A slower growth in April is largely expected, but it will find some footing later [of the year], and expected to have 8% to 9% growth for the whole year,” he said in a telephone interview.

Commenting on the stagnant growth for the housing loan segment, Ching said it was halted by more stringent borrowing rules.

 

This article first appeared in The Edge Financial Daily, on June 1, 2015.